Latest Federal Court Cases – April 2024 #3 | Schwabe, Williamson & Wyatt PC
Luv N’ Care, Ltd. v. Lindsey Laurain, Appeal Nos. 2022-1905, -1970 (Fed. Cir. Apr.12, 2024)
In this week’s Case of the Week, the Federal Circuit affirmed the district court’s bench trial decision that unclean hands barred patentee Eazy-PZ LLC (“EZPZ”) from seeking relief, and also addressed issues concerning inequitable conduct, patent invalidity, and attorneys’ fees and costs under 35 U.S.C. § 285. The case involves U.S. Patent No. 9,462,903 and U.S. Design Patent No. D745,327, both owned by EZPZ and directed to a “self-sealing dining mat with integrated tableware” aimed to prevent toddlers from spilling food during mealtimes. The dining mat prevents displacement by creating “a partial vacuum” when one attempts to lift the planar portion of the mat away from the underlying surface.
Luv n’ Care (“LNC”), a manufacturer of dining mats for toddlers, filed a declaratory judgment action against EZPZ in the district court seeking judgment that the ’903 and ’327 patents were invalid and unenforceable. EZPZ asserted that LNC had infringed the patents, among other counterclaims. The district court held that: (1) the ’903 patent was invalid due to obviousness over prior art; (2) LNC failed to prove inequitable conduct because EZPZ’s misrepresentations that the prior art “did not exhibit self-sealing functionality” were not material and did not show a specific intent to deceive the USPTO; and (3) EZPZ’s litigation misconduct amounted to “unclean hands” that barred EZPZ’s recovery. However, the district court denied LNC’s motion for “exceptional case” attorneys’ fees and costs.
First, the Federal Circuit addressed EZPZ’s argument that the district court erred in finding unclean hands. Based on the facts, the Court agreed with the district court’s finding. The Court held that the totality of the circumstances, including “failing to disclose certain patent applications during discovery, attempting repeatedly to block LNC from obtaining [EZPZ’s] prior art searches, stringing LNC along during settlement negotiations, and providing evasive and misleading testimony,” met the standard of “unconscionable acts.” The Court also found that there was an “immediate and necessary” connection between the misconduct and the litigation for not only the utility patent infringement claims, but also the design patent and trade dress claims, because the multiple acts of misconduct had directly interfered with LNC’s litigation strategy.
Second, the Court vacated the district court’s determination that Luv n’ Care failed to prove inequitable conduct. Under Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011), to prove inequitable conduct a party must show by clear and convincing evidence that (1) the patent applicant made misrepresentations or omissions material to patentability with the specific intent to mislead or deceive the PTO and (2) that deceptive intent was the single most reasonable inference to be drawn from the evidence. In this case, however, the Federal Circuit emphasized that in cases of egregious, affirmative misconduct, materiality may be established per se. Accordingly, the Court remanded the case to determine whether the patentee’s misrepresentation concerning the self-sealing functionality of the prior art amounted to affirmative and egregious misconduct. Specifically, the district court was instructed to evaluate whether the USPTO’s decision would have been different if EZPZ had described the prior art accurately and evidence had not been withheld from the USPTO. With regard to deceptive intent, the Federal Circuit found the district court had not applied the correct legal standard, insofar as it failed to analyze the collective weight of the evidence regarding each applicant’s misconduct as a whole, as opposed to only considering each individual act of misconduct.
On the question of obviousness, the Federal Circuit found the district court’s grant of summary judgment was in error because there was a genuine dispute of material facts with regard to whether a person of ordinary skill could find that the prior art disclosed the self-sealing function.
Finally, the Court addressed LNC’s denial of its motion for attorney fees and court costs. The Federal Circuit explained that due to the case being remanded, the district court could not yet assess the “totality of the circumstances” needed to determine whether the case was exceptional, so as to warrant the award of attorney fees and costs. The case was remanded to the Western District of Louisiana district court for further proceedings.
The opinion can be found here.
By Brittani Gambrell
ALSO THIS WEEK
Salix Pharmaceuticals, Ltd. v. Norwich Pharmaceuticals, Inc., Appeal Nos. 2022-2153, -1952 (Fed. Cir. Apr. 11, 2024)
In an appeal from a district court judgment and injunction in an ANDA case, the Federal Circuit affirmed. The case involved a number of patents that cover rifaximin, an antibiotic used to treat hepatic encephalopathy (HE) and irritable bowel syndrome (IBS-D). The Federal Circuit affirmed findings by the district court that some of the patent claims were invalid as obvious, and found no clear error in the district court’s assessment of the prior art.
However, the district court found the patents directed to HE were not invalid and that Norwich had infringed those claims. The district court ordered the FDA to defer final approval of the ANDA until the expiration of the infringed patent. Norwich thereafter amended its ANDA to carve out HE use, and moved the district court to modify the injunction, so Norwich could sell its product for use in treating IBS-D alone. The district court denied that motion, and Norwich appealed. The Federal Circuit affirmed. The Court construed the Hatch-Waxman Act such that the Court’s Order applied to the ANDA as filed, and did not preclude Norwich from filing a separate ANDA focused on particular, non-infringing uses. Applying Rule 60, the Federal Court held that the district court had not abused its discretion in declining to modify its injunction based on the amended ANDA.
Judge Cunningham dissented with respect to the majority’s obviousness determinations.
The opinion can be found here.
